Kolkata: After surging for a few weeks to surpass the unbelievable mark of Rs 100,000/10 gms, the price of the yellow metal has been declining over the past few days. From a level of Rs 99,100/10 gm on April 22, the price of gold 999 — the highest purity — has come down to Rs 93,393 on May 2 — a drop of 5.75% over mere seven trading sessions.
According to IBJA data, the opening price of 10 gms of gold 999 in the past five days was the following Rs 93,393 (May 2), Rs 95,689 (April 30), Rs 96,286 (April 29), Rs 95,420 (April 28) and Rs 95,669 (April 25). The prices of gold 995 in the same period are Rs 93,019 (May 2), Rs 95,306 (April 30), Rs 95,900 (April 29), Rs 95,038 (April 28) and Rs 95,286 (April 25).
The term “999” on gold signifies its purity. It means that the gold is 99.9% pure, with only 0.1% of another metal. This is nearly equivalent to 24-karat gold, which is considered the purest form of gold. 995 gold signifies a gold purity level of 99.5%, meaning it is 99.5% pure gold and 0.5% other metals. This is a common standard for investment-grade gold such as coins and bars. It is slightly less pure than 999 gold (99.9% pure).
The price of gold is often dependent on crisis. In fact, gold thrives on crisis and tension. See a few figures here. The rate of 24-carat gold rate was around Rs 79,360 per 10 grams on November 10, 2024 — just a few days after Donald Trump was elected as the US President. Gold prices began rising dramatically during the period when Trump’s tariff tension was building. Another reason was a weakening dollar.
Recently Donald Trump signed an executive order that said the government would relax 25% tariff on automobiles and auto parts. The US dollar also gained strength. While the first order helped reduce uncertainty a bit, the strengthening of the dollar helped bring down the price of gold. Also, investment experts said they were expecting some profit taking after gold went past the Rs 100,000 mark (adding the 3% GST).
However, if US Fed reduces key policy rates in order to stimulate economic growth in the largest economy of the world, gold prices can get an upward push again. Therefore, experts will look at three factors to understand the price of gold next — the US fed’s decision (which, in turn, will be warranted by US economic data), the movement of the US dollar index and Trump’s tariff decisions.
India is heavily dependent on imports for gold. The demand for gold in India is mainly for jewellery, however, a significant part of it is also for investment purposes as people buy a lot of coins and bars for investment. In the financial year FY24, India imported a total of $48.84 billion worth of gold — a significant increase from the $33.6 billion that came into the country in FY19. In fact, gold is the usually the second biggest item in India’s import bill after crude oil and the government has been trying to bring down the import. It introduced the SGBs (Sovereign Gold Bond) and monetisation of gold to reduce imports. Investing in ETFs (exchange traded fund) is also supposed to help curb the demand for physical gold.
(Disclaimer: This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds, precious metals, commodity, any form of alternative investment instruments and crypto assets.)
